Amazon price cuts: smart or suicide?

CBS.MarketWatch.com

When a company that still hasn't turned a profit says it's cutting prices on the stuff it sells, it raises a lot of questions. So when Amazon.com
AMZN, +0.34%
announced it was cutting prices on best seller list books in half, a move quickly matched by rival BarnesandNobel.com, the Amazon faithful scratched their heads.

At TheMotleyFool's Amazon board, reaction was mixed. MadameChose ..."This is a sad day, indeed. Loss leaders are an indicator of one of two terrible things. Strong competition is coming. Strong enough to lure Amazon customers away. Here, "half off" is like a sandbag in a hurricane. (And) their book business is mature (e.g. no more than a cash cow). This is a sign that they need multi-item orders to keep the category from bleeding to death. Here, "half off" is like a tourniquet." Qcdude2 ..."When Wal Mart has driven out all the mom and pop stores in a three town area and now dominates retail sales in the entire county and they put some things on sale, do they get called desperate, idiots etc?The way they drove out all other business is to monopolize an area and drive out the competition with price. Amazon seems to be doing that really well."

Over at RagingBull, Amazon's latest move was the last straw for some. chocolateorange ..."If they can't make a profit at the old prices, how will they make a profit at 50 percent off?I'm no mathematician, but this doesn't make sense to me. My shares are gone, and I'm happy to see them go before this gets ugly. I'm moving that money to descent stocks."And at a message board where traders who sell a stock like Amazon short usually get ridiculed, it was the shorts that were having their day this time. mrpig ..."The next 100 share lot that goes will be me closing out my short position. Maybe that's what's keeping this stock from free falling. Could it be that the buys are coming from people closing out their short positions?" And this from greenleeco ..."Hey you longs. The flames are all around you. It's time to leave the building while you are only singed. If you wait much longer nothing will be left."

Global Crossing goes West

Is a merger with a Bermuda company that's barely two years old good news or bad for baby bell USWest [s:usw]?Global Crossing
GBLX, -3.00%
and USWest announced a complex merger that had traders at SiliconInvestor trying to figure out the deal. Teddy ..."I like this deal. I like it a lot. I've never seen anything structured like this before. (Global Crossing founder and CEO)Gary Winnick is an excellent deal maker."stephen karasick ..."Don't like the deal...too complex...tracking stocks...simple is always better...will sell tomorrow if not down too much from the get go."

Part of the Global Crossing merger with USWest would include issuing separate stocks to track both the telecom and Internet related businesses. That in itself had some posters wondering whether the deal made sense. CFRebel ..."I can't yet say it's a mistake but it sure is a weird choice to me. I hope these guys know a lot more than the rest of us. Giving shareholders a choice in which part of the entity they want may be very meaningful in that you can pick your flavor. This looks more like a partnership than a merger. If they want to continue their spree, I'd rather see them put that (money) to good use buying bandwidth-hungry organizations or laying cable. " M Frank Greiffenstein ..."Not all that weird. Yes, USWest is the weakest of the baby bells, but also the cheapest. The deals make sense strictly from the standpoint of price. Global Crossing's plans are clear. They are addressing the major weakness of not having a presence in the world's largest telecommunications market, the USA. This was the quickest and cheapest way to do it."Still others think Global Crossing is making a big mistake. Franz Ross ..."I think most people feel that Bob A(CEORobert Annunziata) has given away the keys to the castle at Global Crossing. He is no longer in charge...You gotta have one aggressive and decisive boss in charge or you don't move. It's like having two people hammer a nail at the same time."

Intel's faithful

With so many tech stocks racing ahead this year, would you believe that investors in Intel [s:intc], one of the world's best known technology companies, are sitting on a stock that's worth almost exactly what it was when the year started?If you follow Intel or hold its stock, you're painfully aware of it. But the Intel faithful still like their company. TheMotleyFool's Intel board is full of optimism. throgsnk ..."Intel at under 60 is a great buy. Keep an eye on the daily volume as quarterly earnings reporting date approaches. The volume will begin to creep up as the institutions accumulate the stock. Then they'll be a parade of analysts upgrading the stock to a strong buy. It's the same old game. The analysts disseminate negative news, push the stock down - tell their best clients to accumulate the shares while they're hammering the stock and then, after the accumulation occurs issue strong buy ratings. That whipsaws the small investor and gives the best clients a midyear Christmas present." joewin ..."I agree. I will be buying some this week and hold for five plus years."apophyge ..."I think you give too much credit to the analysts. Summer is traditionally a slow period for computer stocks. As September approaches sales pick up. If there is no warning by the last week in May you can count on Intel stock going higher until Valentine's Day!"

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